Among nonprofits, housing organizations stand out as a breed apart, and Hispanic Housing Development Corp. in Chicago is no different: It manages a steady cash flow from 3,400 apartments, and routinely keeps $7 million to $8 million in the bank.
"We are a nonprofit, but we're in the real estate business," says CEO Hipolito "Paul" Roldan. "In real estate, you need to leverage other people's money. We have relationships with about 30 banks who fall over each other to do business with us. We also have terrific relationships with the local HUD (Department of Housing and Urban Development) office."
Mr. Roldan only approaches foundations for funds when launching new initiatives; he finances regular operations with rent checks. Last year, Hispanic Housing Development had revenues of $23 million and ranked seventh on the 2004 Hispanic Business Top Nonprofits directory. At the end of 2003, the organization had assets of $110.3 million, mostly of the brick-and-mortar variety.
"It's a case of traditional business practices in a nontraditional business environment," says Thomas FitzGibbons, executive vice-president at MB Financial, which has funded developments for the organization. "It's a well-managed company that focuses on housing and economic development, and to continue to do that while building up resources and talent, you have to manage it as a strong business."
Although the organization doesn't serve Hispanics exclusively, it targets projects in high-density Hispanic neighborhoods. According to 2000 Census data, 25 of Chicago's 77 neighborhoods have a Hispanic component of 30 percent or more. A typical project that fulfills the organization's mission is Paseo Boricua, five stories of apartments for low- and moderate-income seniors in Humbolt Park, the heart of Chicago's Puerto Rican community.
Many of the organization's recent projects focus on preparing buildings for sale, thus encouraging home ownership. The organization just finished Vista North in the Rogers Park neighborhood on the northern edge of Chicago. It consisted of 1920s-era apartments that the organization bought from HUD, refurbished, and sold as condos. "We had people moving in at 40 percent of median income," Mr. Roldan says.
Under another HUD deal, the organization bought 87 homes in central Chicago, refurbished them, and sold them at cost to qualified buyers. A separate program seeks to build two- and three-story apartment complexes on vacant lots around the city.
Newer development projects include commercial and retail components, reflecting the integrated nature of the modern urban lifestyle. "Usually it's integral to the success of residential to have commercial nearby," says Mr. FitzGibbons. Since many of Hispanic Housing Development's projects cater to seniors and near-seniors (55+), the residents want retail and medical offices in close proximity.
Mr. Roldan set a course for the organization's current success 11 years ago when he used a $50,000 Rockefeller Foundation grant to create Tropic Construction, a for-profit subsidiary. Previously, the organization sent bids to qualified HUD contractors, with the lowest bidder winning the job. "We got into a project with a contractor with evil intentions from the beginning," Mr. Roldan recalls. "We knew at the end of that job we needed our own construction expertise."
To spur local economic development, 40 percent of a project's work force should come from the neighborhood. With Tropic, Hispanic Housing Development has direct control over hiring to move Hispanics into the construction trades. And as a for-profit contractor, Tropic can take on commercial jobs when not working on projects for its parent, thus providing steady employment.
For Mr. Roldan, the journey to become an affordable housing czar started in a Brooklyn taxi. "I met all kinds of people – priests, lawyers, you name it – really looking for what would interest me. I found out I wanted to work in the neighborhood," he says. It was after working at a Brooklyn community organization and earning a degree at night that he answered the want-ad that would land him the job as head of Chicago's biggest Hispanic housing organization.
View the HISPANIC BUSINESS 2004 TOP NONPROFITS
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